Aritas Vinyl IPO Analysis: Should You Buy or Skip?

As India’s shift toward advanced composite materials, Aritas Vinyl positions itself as a focused composite solutions provider catering to automotive, electrical, and industrial applications.

Let’s explore this upcoming IPO further:

Aritas Vinyl's share price will be finalised post-allotment, while grey market cues through the Aritas Vinyl IPO GMP will likely reflect market sentiment closer to listing.

The Indian synthetic leather market serves as a cost-effective, cruelty-free alternative to genuine leather, primarily used in footwear, automotive, and furniture sectors. It provides affordable and versatile alternatives to traditional leather, mainly used in footwear, automotive upholstery, and furniture. 

The industry continues to grow steadily due to rising demand from urbanisation and eco-friendly consumer preferences. This industry supports key manufacturing sectors while adapting to sustainability trends.

India's polyurethane synthetic leather market size was valued at $7.6 B in 2024 and is projected to grow at a CAGR of 7.9% from 2024 to 2030.

Synthetic leather substitutes genuine leather in upholstery, footwear, clothing, vehicle interiors, and more.  Furthermore, the rising adoption of artificial leather over genuine leather due to increased awareness regarding animal cruelty and veganism has also led to the growth of the Indian polyurethane (PU) synthetic leather (artificial leather) market. 

Company Origin Story

Originating in the year 2020 in Ahmedabad, Aritas Vinyl Limited focuses on producing high-quality PVC-coated and PU synthetic leather through advanced transfer coating technology. In simple words, the company specialises in creating synthetic materials with a real leather's look and feel while being lighter, more affordable, and cruelty-free for everyday use. 

Aritas serves diversified sectors like footwear uppers, automotive upholstery, handbags, and furniture coverings with durable, cost-effective alternatives to genuine leather. The company distributes its products primarily through a network of distributors across India while exporting to markets including the UAE, USA, and others.

Revenue Bifurcation (%)

Gujarat has consistently strengthened its position as the company’s largest market, rising from 30.8% in FY23 to 33.5% in FY25. 

Maharashtra, however, shows a declining trend, dropping sharply from 17.4% in FY23 to 12.9% in FY25. Tamil Nadu and Uttar Pradesh remain relatively stable contributors with minor year-to-year movement. 

Exports (majority UAE) have grown meaningfully over the three years—from 11.4% to 16.7%—although they dipped slightly in FY24 before rebounding in FY25. Overall, the data shows increasing dependence on Gujarat and rising traction in export markets.

Aritas Vinyl Limited’s manufacturing facility is strategically located in Ahmedabad, Gujarat. The plant measures approximately 6,067 square meters and is operated on land taken on a 10-year lease (wef from Nov 2020) from one of the company's promoters.

From FY23 to FY25, the company steadily expanded its installed capacity from 42 lakh meters to 78 lakh meters, while actual production also increased from 35.7 lakh to 60.16 lakh meters. 

Despite this sharp capacity addition, utilisation remained stable and healthy, currently at 77% in Fy25—indicating that the company was able to efficiently ramp up output in line with rising capacity. This reflects strong underlying demand and effective absorption of new capacity over these years.

Financial Performance 

The top line has given a decent growth of around 39% CAGR from FY23 to FY25. While the growth in FY25 has been at 42%. The growth, as per 5MFY26, however, does not seem to be very convincing in terms of annualised growth. 

Margins have improved moderately, with EBITDA margins expanding from to 6% in FY23 to 8.8% in FY25. The PAT margins have risen from 1.9% in Fy23 to 4.2% in Fy25. Though the management claims higher capacity utilisation as the reason for the margin increase, since synthetic leather is a commoditised business, it can still be seen that the margins are very low.

The CFO, which was on the negative side in past years, has now been positive in Fy25 at 8.7Cr. 

Coming to the cash conversion cycle, being at 170 days in Fy25, has been on a stable trend over the years. This shows that the company has increased sales without increasing its working capital requirements. 

Aretas Vinyl has significantly reduced its debt level. D/E ratio has dropped from 8.8 in Fy23 to currently at 1.8. 

ROE and ROCE stand at 31.2% and 21.9%, placing Aritas Vinyl above the listed peers. The company has also maintained its current ratio well over the years, currently at 1.29.

Management + Promoter Holding

Aritas Vinyl’s promoters—Mr. Anilkumar Agrawal, Mr Sanjaykumar Patel and Mr Ankit Agrawal collectively bring decades of hands-on experience in the synthetic leather industry.

The promoters guide the company by implementing deep operational know-how in PVC manufacturing and capacity expansion with strong skills in distribution networks, export markets, and navigating competitive production landscapes.

While 3 out of 7 board members are independent directors, the governance ensures quality as the audit and remuneration committees are led by independent directors. 

From a control standpoint, the promoters have a low pre-issue stake of 47.2% stake pre- issue. Post-IPO, this stake will further dilute to 27.9%. It can be observed that the promoter’s ownership and influence are greatly reduced post IPO.

Peer Analysis (FY25)

On the basis of peer analysis, it can be said that Aritas Vinyl has an average quality of financials. The EBITDA & PAT margins are 8.8% and 4.2%, respectively. 

The return ratios of the company are currently higher, with ROE & ROCE at 30.1% & 19.2%, respectively.

In terms of valuation, Aritas Vinyl lies on the higher side with a P/E ratio at 15.9x, while the EV/EBITDA also stands higher at around 14.9x. However, it must be noted that the company has higher borrowings, with a D/E ratio of 1.8.

Overall, in terms of margins and valuation, when compared to peers, it can be said that the company has a moderate level of financials, requiring focused efforts by the management. 

The company will be using the proceeds for:

• Capital expenditure (₹426 lakhs): Funding installation of solar power plants to reduce energy costs and support sustainable operations at its manufacturing facility.

• Working capital needs (₹2,045 lakhs): Meeting increased raw material procurement, production scaling, and trade receivables for PVC/PU leather across footwear, automotive, and upholstery segments.

• General corporate purposes (balance): Covering strategic initiatives, administrative expenses, and other permissible uses within SEBI limits.

Overall, the issue aims to bolster Aritas Vinyl's production efficiency, working capital, and growth in the synthetic leather market.

At Alpha Venture X Fund, we assess opportunities through our LMVT framework — Leadership, Moat, Valuation, and Tailwinds — enabling us to identify scalable businesses with durable fundamentals.

Leadership: Founder-led with strong industrial experience and equity retention, ensuring aligned execution and focus on scaling the brass components business.

Moat: Despite having in-house manufacturing, the company lacks a moat since PVC leather is a commoditised business. Putting it at risk in terms of expansion. 

Tailwinds: Rise in vegan & ecological preferences towards synthetic leather, backed by government PLI schemes for local manufacturers.

Valuation: The company is valued at a higher range, with P/E being at 15.9x; the EV/EBITDA ratio is also on the higher side, currently around 14.9x. 

Bottom Line: Synthetic leather is a commoditised business, backed by a large number of private and unorganised players. The margins are at low single digits, making the business vulnerable to raw material fluctuation. Aretas Vinyl is not a BUY for investment purposes.